Do you read the fine print?

We've all heard the advice to “read the fine print” before we sign anything, but does anyone actually do it?

I recently spoke with a man we'll call Randy. Six months ago, Randy went to a state fair, the kind that vendors of all kinds descend upon to hawk their wares.

One of those vendors was a hot tub company with a very recognizable name. They've been in business for decades. Randy stopped by their booth. “They had a specific color of cabinetry and material that was a perfect match for our deck, so I decided to order it,” he says.

He put down $3,000, with $2,000 due upon delivery. “Before I signed, I asked how long it would take to get the hot tub, and they said three months,” he said.

Six months later, Randy is not enjoying an ice-cold beer in his brand new hot tub. In fact, the company hasn't even started building the hot tub, which reps say is because they don't have enough orders for hot tubs with the same material that he ordered. “When I call, all they say is ‘read your contract,'” he says. Only he has read the contract, and it's so ambiguous that it doesn't answer his questions.

No One Reads This Stuff

“I know I should've read the contract,” says Randy. But the truth is that most of us would have done the same thing.

Think about how often you click “agree” to something like a new iTunes agreement, without reading a single word.

Why don't we read it? For one thing, most contracts are crazy-long. For instance, one study analyzed four major software sellers' contracts and found that they “were an average of 74,000-plus words, which is basically the length of the first Harry Potter book,” James Gibson, a professor of law at the University of Richmond, told the New York Times. So we don't read it because it's impossibly long, and it certainly doesn't read like a J.K. Rowling novel, even if it is the same length.

Also, even if you did read it, you probably wouldn't understand it. Randy even showed his contract to an attorney friend, who agreed that the language was very unclear.

Why Contracts Are So Impossible

Contracts are meant to protect a company in every possible situation, so they're lengthy. That's understandable, since companies are trying to avoid costly frivolous lawsuits.

But in some cases, user agreements and contracts take away your rights, allowing a company to be abusive, deceptive and even negligent. For instance, according to Faircontracts.org, it's not uncommon for contracts to make consumers agree to unfair terms, such as:

No courtrooms. The contract requires you to go to arbitration, sometimes in places far from where you live or work.

No class action lawsuits. “The ability to join a class action lawsuit is important because it is sometimes the only way that a person can get fair compensation for their problem,” according to Faircontracts.org. “If the person is only asking for a small amount of money, it may be difficult to find a lawyer to represent them because the cost of suing the company may be more than the compensation they are seeking.”

No freedom of speech. You aren't allowed to criticize the product, service or company.

No accountability. The contract states that companies aren't responsible for cheating or harming consumers.

No binding agreement, for them. Some contracts give companies unilateral power to rewrite the terms whenever they want. “These types of changes are common in … cell phone contracts, credit card agreements or cable television agreements,” according to Faircontracts.org. “One major problem with unilateral modifications is that consumers do not typically receive much notice of any changes made, as they are increasingly being posted online rather than sent directly to consumers.”

Some argue that the “informed minority” will protect the general public from abusive practices like these. In other words, the few who actually do read their contracts will prevent sellers from offering unfair terms. But a New York University study casted some serious doubt on the theory.

“We find that only one or two out of every thousand retail software shoppers chooses to access the license agreement,” write the researchers, “and those few that do spend too little time, on average, to have read more than a small portion of the license text.”

In addition, they found that “consumers may be less likely to access [agreements] from companies they trust, where trust may be proxied for by company size or degree of familiarity.” Randy says company size and familiarity are part of why he didn't scrutinize his contract. They weren't some fly-by-night company he'd never heard of.

What to Do Before You Sign

There aren't easy solutions to this problem. No one can read all the fine print. And usually, your only options are to accept it or to not use or buy the product. For instance, if you hated yourself enough to actually read the iTunes terms, and you didn't like the languaging in section 79 article 13, your only option is to not use the service at all.

But if you're making a large purchase, make sure you at least know the return or cancellation policy. Ask a sales rep to explain the policy and to highlight it in the contract. Make sure the contract is clear and matches what the rep is telling you. For instance, Randy might've asked the salesperson to point out where in the contract it says that his hot tub will be delivered in 90 days, along with the cancellation policy. His contract outlines neither.

Also, there's a slim chance that you can take legal action, even if you waived your rights. For instance, in 2005, a Connecticut man injured while snow tubing was granted the right to sue the company for negligence, despite signing a waiver. As reported by the New York Times, the State Supreme court noted that in most states, waivers are considered valid, even when a company has been negligent. “But after its decision, by a 4 to 3 vote, Connecticut is one of a handful of exceptions,” wrote NYT reporter Avi Salzman.

As for Randy, his attorney friend is going to send a letter to the hot tub company, asking to cancel the contract. There could be a loophole, he says, because the contract says it's irrevocable once the work on the hot tub has begun, which has yet to happen. Randy is also considering contacting the Better Business Bureau and the state fair that hosted the vendor.

But his attorney says there's a good chance he'll be out the $3,000 deposit. “I even asked the company if they'd just refund my deposit, and we could just part ways,” he said. “They said only the owner can issue refunds, and of course I can't get him on the phone.”

As a freelance writer, editor, and blogger, April Dykman specialized in personal finance, real estate, and entrepreneurship topics. Her work has been featured on MSNBC, Fox Business, Forbes, MoneyBuilder, Yahoo! Finance, Lifehacker, and The Consumerist. Now she does direct response copywriting but, in her free time, April is a wannabe chef, a diehard Italophile, and a recovering yogi.

Having two lawyers for siblings has really taught me the importance of contracts. I have a wedding upcoming and really took the contracts seriously with our vendors before signing and committing the deposits. I feel I must prepare for the worst and made sure the contracts had everything explicitly written out that I could think of. Sorry to hear about Randy’s experience. It’s pretty terrible that a company can be like that. Has he tried contacting his local news station? Sometimes those stations who have folks who go out and try to shame the company into paying up scorned consumers… Read more »

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Elizabeth

6 years ago

I’m a little confused — was the hot tub a planned purchase or an impulse buy? Did Randy go to the fair to seek out vendors, or did he happen to just be passing by? I can’t imagine spending thousands of dollars in a situation that doesn’t allow me to do research ahead of time or provide me a quiet place to sit and read a contract. Sales people love high pressure environments where the buyer thinks something is scarce or that the deal is a limited time offer. I think not reading a contract is a symptom of a… Read more »

As a small business owner, terms and contracts are important and it is pure stupidity on the part of the consumer that doesn’t read the contract. If a consumer doesn’t want to read the contract and accept personal responsibility for their choices, then they should not make the purchase. We live in an age where personal responsibility is at an all time low and consumers use reviews to threaten and bully businesses or lash out when they don’t get their way. We’ve had people try to steal our product and use reviews to bash us when we wouldn’t let them… Read more »

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lmoot

6 years ago

Why is the deposit more than the balance? I would contact the BBB. Randy basically gave them a $3k loan that they’re earning interest on (and you’re losing interest on) and they haven’t even invested it in ordering the materials yet, so they’re either sitting on it or using it for something else.

Good luck to him. I try hard as I can to stay away from buying things that require a contract (save a car or home). But sometimes it is unavoidable, especially with home repairs/ rennovations.

I don’t know how it works in other states, but we were cheated out of a (small) amount of money through a transportation service in Hawaii. I reported them to the BBB there and though the BBB wrote the company several times, there was no response.

That pretty much seemed to be the end of the story. I don’t know what good a BBB is except as a reference guide for complaints.

Some cities and counties have consumer protection agencies that can help you navigate a situation like this when BBB or your credit card company is not supporting you and you feel you’ve been misled or are the victim of fraud.

Also, you might try your state Attorney General’s office or the AG’s office in the state where the company is located. AG’s offices usually have a procedure for filing consumer complaints. Unfortunately, more and more local consumer affairs departments are being eliminated due to austerity measures. (I worked at one myself until it was eliminated in 2012.) It’s a pity, because many people have difficulty advocating for themselves, for many reasons. My department helped a lot of seniors with issues including hearing aid contract problems, phone and utility issues, dishonest contractors and outright scams. It’s a long shot that Randy’s… Read more »

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k.

6 years ago

I think it’s evident that even if Randy had read the contract, he couldn’t have prevented his current situation (outside of never doing business with these people). The Better Business Bureau has helped me recover money (albeit a much smaller sum) that contractually, I couldn’t have expected to see again. Don’t wait to contact them (sending a letter to the state fair is a good idea ass well). Failure to deliver goods and the possibility of predatory business practices are cause for the BBB and other consumers to be very interested. The threat of bad publicity should also be good… Read more »

I agree. I’ve had very good experiences with the BBB. You can file a complaint on line. All they really ask is that you give them the facts and that you’ve tried to achieve resolution on your own before you contact them.

We’ve also had good results when we’ve written to the State’s Attorney’s office, as well as BBB.

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mike

6 years ago

i would never give money of that nature to a vendor at a state fair. State fairs are for 4h, bbq, rides, rodeo, deep fried everything, and other fun stuff. Stay away from things that cost thousands of dollars like hot tubs, mobile homes, etc.. Go to the place of business directly or go somewhere you don’t have to wait. I guarantee their was a major retailer that had the access to the color/cabinetry that he wanted, if he had looked around, not some guy at a fair. Yes their is contract confusion issue but this is an is issue… Read more »

Agreed. At most, I will pick up a brochure or a business card for a sales rep and keep it for future use. I can’t imagine heading to a fair with the purpose of just relaxing and having fun, and then somehow writing a major check for a big appliance.

Is he sure this is even a legit sales rep from the company?!? This whole scenario sound weird.

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Luke

6 years ago

“But in some cases, user agreements and contracts take away your rights, allowing a company to be abusive, deceptive, and even negligible.” I assume the author meant “negligent as oppposed to negligible? Just making sure there isn’t another meaning of the word.

I really enjoyed the article. I, too, try to avoid contracts if at all possible.

Sorry to say, but there are several other typos in this article as well.

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WWII Kid

6 years ago

I work for an attorney doing strictly transactional work. The b*llsh*t in contracts and agreements is there for a purpose – to confuse and dismay. Sales contracts are the same way. No one has ever been able to explain to me why an agreement can’t just say “I’m selling you this for this price and you agree to pay me for it”. After 25+ years of doing this, all I can say is if you sign a contract prepare yourself to just walk away if it falls apart or be prepared to fight for years over it. Sorry about the… Read more »

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Kurt @ Money Counselor

6 years ago

I just signed up a nonprofit I’m involved with for a credit card merchant account. The account services agreement is 34 pages long. No, I didn’t read it. But I made it available to every other Board member so I wouldn’t be the only one responsible! 🙂

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Mrs PoP @ Planting Our Pennies

6 years ago

I learned the hard way once that verbal promises accompanying a short easy to read contract are absolutely useless. I consigned a car to sell and the contract had all of my duties in it (when and how much to pay), then verbal promises were made about how they would market it, level of service, etc. Well, none of the verbal promises happened, but I still had to pay every dime. Left an extremely sour taste in my mouth and I reported their bad behavior as widely as I could but “they had done nothing illegal”.

Contracts mainly just keep honest people honest. If someone is out to screw you, there is very little that you can do to prevent it… even with a contract!

This is a good lesson in being wary of who you do business with!

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HKR

6 years ago

Aside from the hot tub situation, I gotta say I disagree with stuff like the snow tubing incident. Liability waivers for this kind of activity are usually pretty clear – I mean snow tubing is voluntarily choosing to fling yourself down a large hill on a giant balloon that you have no control over as it accelerates to a very high speed. If you don’t know bad things can happen here, you’re an idiot. We choose to do this type of thing though because it’s fun and thrilling, and we promise not to blame the people who are offering us… Read more »

Jus playing devil’s advocate here, but did you read the details of what was involved in the tubing lawsuit. I didn’t, so this is purely hypothetical, but if say the man tubing encountered something that a company was “negligent” about, it had to have been just that I’m sure. Maybe they cut down a tree and left it there in the tubing course. Something like that is what I would consider negligent that they did have control over but did nothing about. Such circumstances prove that they were not trying to keep the tuber safe within reasonable confines.

I did. Per the NY Times article COURTS SAY MAN CAN SUE DESPITE SIGNING WAIVER by Avi Salzman published December 4, 2005, “Greg Hanks, an engineer from Durham, went tubing with his three children and one of their friends on Feb. 16, 2003, at Powder Ridge. On one of his runs down the slope, Mr. Hanks caught his ankle between the tube and the snowbank at the side of the tubing run, shattering his ankle, he said.” I don’t believe gross negligence should be excused – leaving a tree in the middle of a tubing run would be grossly negligent… Read more »

I agree with HKR. I own a small fitness facility and everyone that walks through the door signs a liability waiver. It’s standard industry practice when involving physical activity. There are rare times when people butt heads with me about. I politely show them the door as I’m not interested in sue happy people. I’m just trying to make a modest living helping people stay fit. I use simple contracts to try and keep everyone honest as I value my job and lively hood.

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Derek - MoneyAhoy.com

6 years ago

I tend to always read the cancellation policy or how to terminate the contract if money is involved.

I’m probably in the 5% of people that would actually take the 2 minutes to do this though…

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Matt @ Your Living Body

6 years ago

Ugh, it’s so pointless with stupid contracts from companies. 1. Contracts are so ridiculously long and they take so much time to read. 2. The language (at least to me) is a bunch of law jargon. I’ve had issues with Priceline – they wouldn’t refund a hotel after I had to cancel a trip at the last moment because I had to have emergency surgery because of appendicitis. Because of the “fine print” I basically had no rights. I even got an attorney to review the paperwork and they just confirmed that by “checking the box” I had signed my… Read more »

I consider anything like Priceline–or any pay now online situation–a sunk cost. Once I’ve committed to it, the money is gone (unless I choose to put insurance on it) Sort of like giving money to a friend/relative. I never expect to get it back. That said, when I royally messed up and got a date wrong for a hotel stay (we arrived early by one night) the very nice desk clerk offered to not only find us a room in the vicinity (which didn’t pan out) but rebooked the night for us so we could use the room. I fully… Read more »

I agree, me too. Priceline is a network company whos very agreement with the hotels they work with is that they will guarantee occupancy of vacant rooms. The premise of Priceline wouldn’t work if they refunded last-minute cancellations. The person that got your room at a reduced cost because of your cancellation has you to thank for it, possibly as you would have had to thank someone who had to cancel it before you. Possibly if you ordered directly from the hotel you’d have better luck, but I’m guessing you went with Priceline b/c of the lower price.I wouldn’t fault… Read more »

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Monica @MonicaOnMoney

6 years ago

I don’t read the fine print. But now I’m thinking that I should. Good topic!

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Rhonda35

6 years ago

For those interested in learning more about what rights we waive when signing contracts or clicking “I agree” on the internet, check out the soon-to-be released film TERMS AND CONDITIONS MAY APPLY. The website for the film is http://tacma.net For a laugh, be sure to read the site’s terms and conditions before clicking “I agree.”

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Tara

6 years ago

also, speaking of contracts with iTunes, I’m surprised no one mentioned that great Southpark episode about this very thing. Worth watching!

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Tyler Karaszewski

6 years ago

I tried to copy and paste the terms of service for *this very website* here and post them as a comment, but my comment mysteriously disappeared. I imagine it was either flagged as spam and hidden or too long too work.

I’m not sure that’s so unusual. For example, BankRate says “Bankrate does not make any representations, warranties or guarantees, express or implied, regarding the accuracy, correctness, or completeness of the Content or the services and products associated with The Site, nor the safety, reliability, title, timeliness, completeness, merchantability, conformity or fitness for a particular purpose of the Content or the services and products associated with The Site. It is your sole responsibility to independently evaluate the accuracy, correctness or completeness of the Content and the services and products associated with The Site” http://www.bankrate.com/coinfo/disclaimer.asp I imagine it has something to do… Read more »

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Jake @ Common Cents Wealth

6 years ago

I know I don’t read the fine print on most agreements, but I definitely try to on any major purchase. Even though you can’t normally change the terms, it’s nice to know them.

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Ashley

6 years ago

I worked as a loan customer service rep for a bank for 3 years and it taught me so much about contracts. For all the deceptive practices that we all see on the news the amount of people who don’t read basic 2-5 page contracts that do clearly outline fees and then say, “No one reads contracts you have no right to charge me”, is ridiculous. Companies should be fair but we have to take individual responsibility when we sign things. If you’re not sure what something means ask and remember that sales agents get paid on commission so they… Read more »

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Mrs EconoWiser

6 years ago

Here in The Netherlands any judge would find things like you can’t criticize a product a violation of consumer rights. I don’t think it’s legal for companies to put it in their contracts, and if they do our legal system will be on the consumer’s side. How could it be legal in the U.S.A. to muzzle consumers like that?

Because, we have more lawyers per person than any other 1st rate country on the planet and there’s no personal responsibilty here in the U.S.

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Ralph Catania

6 years ago

A cost-effective and increasingly popular way is to have any business or leasing/renting contracts checked by a ‘contract checking service’ – a new legal assistance saving up to 90% on legal fees. For a small fee companies like Check-A-Contract highlight the small print, advise on changes, deletions or additions. Turnaround for contracts is less than 72 hrs and all contracts are worked on by qualified top UK solicitors. Worth well knowing, especially for fleet users.

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Hi! I’m J.D. Roth. I'm here to help you master your money — and your life.

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